The EU, Russia and Ukraine will today hold top-levels talks in a last-ditch effort to resolve the increasingly angry political dispute that has cut off all Russian gas supplies to Europe through Ukraine.

Russia accused Ukraine of "blackmail" and Kiev blamed Moscow for halting supplies without warning as a routine price dispute spiralled into all-out political conflict - and tens of thousands, mainly in eastern Europe, shivered in sub-zero temperatures without heating in their homes.

The EU accused the two countries of making Europeans hostages in their dispute, warning Moscow it risked losing its reputation as a reliable supplier and Kiev its status as an EU partner. But the EU secured a breakthrough when Vladimir Putin, the Russian prime minister, and Yulia Timoshenko, his Ukrainian counterpart, agreed to allow neutral experts to monitor gas flows through the pipeline on either side of their countries' mutual border.

The potential deal was brokered by the Czechs, who hold the EU presidency, José Manuel Barroso, the European commission president, and German chancellor Angela Merkel as Russia and Ukraine intensified their propaganda war. It should enable international monitors to assess whether Russia is pumping Europe's gas through Ukraine's pipelines and Ukraine is, in turn, allowing it to reach paying customers rather than siphoning it off. The EU gets a quarter of its gas from Russia and 80% of this is piped across Ukraine.

The heads of Gazprom, the Russian state monopoly, and Naftogaz, Ukraine's state energy firm, Alexei Miller and Oleh Dubina, are due to meet in Brussels today to try to break the week-long deadlock over long-term price contracts and agree the monitors' arrangement. The pair, accompanied by other senior executives and government officials, will hold emergency talks with EU commissioners and MEPs desperately trying to end a row that threatens hundreds of thousands of Europeans with acute fuel shortages.

Mirek Topolanek, the Czech prime minister, said the next 48 hours could be critical in central Europe and the Balkans. The International Energy Agency, demanding a speedy resolution of the dispute, said Bulgaria, Romania, Greece and Turkey would struggle to provide power and heating if cold weather and gas disruptions continued into next week.

However, Dubina made it plain that Naftogaz would agree to pay Gazprom only $201 (£133) per 1,000 cubic metres of gas, rather than the $250 suggested by Moscow. Gazprom wants a long-term contract that will gradually bring the price Ukraine pays closer to the EU norm. But Ukraine is holding out for cheaper gas and higher transit fees.

In Moscow, where Putin ordered Gazprom to halt all supplies to Europe through Ukraine "in the presence of international observers", the Kremlin accused Kiev of illegal action in shutting down all four transit pipelines and two compressor stations. Gazprom, however, took steps to divert about half its supplies to Europe through pipelines running through Belarus to Poland and to supply Turkey, one of the hardest-hit, via the Blue Stream pipeline.

The number of countries experiencing shortages rose as industrial firms in eastern Europe began shutting down production. Bosnia, Bulgaria, Croatia, the Czech Republic, Greece, Italy, Macedonia, Romania, Serbia, Slovakia - which declared a state of emergency on Tuesday - Slovenia and Turkey all said supplies had halted. Austria, France, Germany, Hungary and Poland also reported substantial drops in supplies.